Ann Arbor, MI Heat Pump Leasing & Installation
In this guide
01
Benefits of Palmetto Heat Pumps
Say goodbye to clunky old systems and surprise repairs. Palmetto Comfort Plan gives you a brand-new heat pump, installation, and full support, all wrapped into one subscription.
Year Round Comfort
A high-efficiency heat pump keeps your home cool in summer, warm in winter, and your energy use in check all year long.
Forget the maintenance
With a Comfort Plan subscription, installation and maintenance are fully covered, no surprise bills, no weekend DIY.
Rewards for renewing
Stick with us and earn credits toward your next system upgrade. It’s our way of saying thanks for building a cleaner, comfier future with us.
02
Ann Arbor, MI Heat Pump Load Calculator
This square-foot calculator offers a starting estimate of your home’s heating and cooling needs, using a 72°F indoor temperature and the ACCA-standard design conditions for Ann Arbor, MI: 91°F outdoors for cooling and -5°F for heating. For an official Manual J load calculation and quote, get in touch with Palmetto’s team. Get in touch with our team for an official quote.
Step 1 of 3
Home location & size
Your home’s location and size directly impact heating needs.
Step 2 of 3
Home attributes
Step 3 of 3
Additional details
Description of what this means for context.
Estimated Heating Needs
Your home’s location falls within the a climate zone with the average extreme winter falling between 10° – 15° F.
Home Details
Recommended equipment capacity
60,000 BTU
5 Tons
Calculated Cooling Mode
102,000 BTU
8.5 Tons
03
Buy it or finance it. Your comfort, your call
There's no wrong way to get cozy. Here's how the options stack up, so you can choose what works best for you.
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Cash |
Loan |
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|---|---|---|---|
| Payment schedule | $0 upfront, then monthly subscription | Full price upfront | $0 upfront, then monthly payment |
| Term length | 10 or 12 years | None | Variable |
| End of term options | Flexible with 25% renewal term credits to new system | No credits to new system | No credits to new system |
| Maintenance included | |||
| Eligible for incentives |
Cash
Loan
Local Incentives
Ann Arbor, MI Heat Pump Rebates & Incentives
Local and federal incentive programs can significantly reduce the cost of a new heat pump system. Here are the programs available to Ann Arbor homeowners.
Ann Arbor A2ZERO Home Rebates
Up to $5,500The active city rebate offers $4,000 for qualifying cold-climate central or mini-split heat pumps, or $5,500 for income-qualified applicants, up to 90% of project cost. ([a2gov.org](https://www.a2gov.org/sustainability-innovations-home/sustainability-me/for-families-individuals/a2zero-rebates/))
Michigan HEAR Heat Pump Rebates
Up to $8,000Michigan’s active HEAR pathway supports eligible electric heat pumps for heating or cooling, with a maximum heat-pump rebate of $8,000; actual awards depend on program requirements and funding. ([michigan.gov](https://www.michigan.gov/egle/newsroom/press-releases/2025/04/23/miher-announcement?utm_source=openai))
Michigan HOMES Heat Pump Rebates
Up to $20,000Michigan’s active HOMES pathway can support heat pumps as part of whole-home efficiency upgrades, with rebates based on modeled energy savings and a maximum of $20,000 per household. ([michigan.gov](https://www.michigan.gov/egle/about/organization/materials-management/energy/rfps-loans/home-energy-rebate-programs))
DTE HVAC Heat Pump Rebate
$150 - $1,200DTE’s 2026 electric-customer incentive chart lists rebates for air-source, cold-climate, ground-source, and ductless mini-split heat pumps; amounts vary by type and efficiency. Funds are limited and first-come, first-served. ([michiganrebates.com](https://michiganrebates.com/sites/default/files/2026-09/CTR-473_DTE_HVAC_collateralFallupdate2026_IncentiveChart_MichiganRebates.com_Electric_v2_WEB_RELEASE.pdf))
Confirmed 2026 options include Ann Arbor’s A2ZERO rebate, Michigan’s active HEAR and HOMES rebates, and DTE incentives for qualifying electric customers. ([a2gov.org](https://www.a2gov.org/sustainability-innovations-home/sustainability-me/for-families-individuals/a2zero-rebates/)) Palmetto can help homeowners identify eligible equipment, apply for available rebates, and maximize qualifying incentives.
Incentive information is based on publicly available data as of 2026 and may change. Contact program administrators to verify current availability and eligibility requirements.
04
Climate Zones
Ann Arbor’s USDA Hardiness Zone 6 means cold winters and warm, humid summers, so homes need heating and cooling. At design temperatures of -5°F for heating and 91°F for cooling, conditions matter when sizing a heat pump and choosing a model. Palmetto understands Ann Arbor’s climate and can recommend a system suited to the area. Explore other zones below or enter your ZIP code to confirm your zone.
Climate Zone 1
Climate zone 1 is not typically seen within the United States outside of Alaska. It represents the coldest climates on the planet.
Climate Zone 1A
Avg. extreme winters: -60° to -55° F
Climate Zone 1B
Avg. extreme winters: -55° to -50° F
Ann Arbor Electricity Prices
Electricity rates are one part of the heat pump cost picture for Ann Arbor homeowners.
Michigan’s average residential electricity price rose from 17.5¢ per kWh in 2021 to 19.3¢ in 2024—about 10%. In 2024, it was above the U.S. average of 16.5¢ per kWh.
A heat pump can deliver roughly two to three times the heating or cooling efficiency of traditional HVAC systems, using less electricity for the same comfort. That efficiency matters when electricity rates are higher.
Over time, using less electricity per unit of comfort can help limit the impact of rising rates. Actual savings depend on your home, system, and energy prices.
Price of Energy: Michigan vs National Average
Ann Arbor Area Utility Providers
Ann Arbor homes may receive electricity from Consumers Energy or DTE Energy. The latest utility figures available are for 2023: Consumers averaged 18.8¢ per kWh and DTE 19.7¢. 2024 data is not yet available.
Consumers’ rate matched Michigan’s 2023 average of 18.80¢ per kWh; DTE’s was higher. Both exceeded the 2023 national average of 16.0¢ per kWh. These comparisons show how local rates compared, but the figures alone don’t explain the differences.
A higher electricity rate doesn’t automatically rule out a heat pump. Because heat pumps move heat efficiently, they may reduce total energy spending compared with traditional HVAC, though results depend on the home and its energy use.
Ann Arbor Utilities Electricity Rates
Let our smart tools do the heavy lifting.
Get personalized tips, usage insights, project tracking, and that daily satisfaction of making your energy work smarter with the Palmetto mobile app.
- Rewards for smarter energy usage
- Energy insights & Dashboard
- Personalized Savings Tools
- Whole Home Energy Management
- Support Whenever You Need It
Repair versus replace
When a heat pump is in need of repair it is worth considering whether a replacement would be a better investment. While each case is unique, we generally recommend investing in a new unit when repairs exceed $5,000.
A heat pump's lifetime is impacted by a number of factors including environment, use and the quality of the unit. It's important to choose the right unit for your climate zone and home's unique attributes.
When you are in need of repair, we recommend choosing a service provider that is an expert in the heat pump brand you have installed, and checking online reviews to ensure you are investing in the right level of service.
| Potential repair | Cost range | Description |
|---|---|---|
| Capacitor Replacement | $150 - $400 | Common issue when unit struggles to start or makes a humming noise. Capacitors store the electrical energy needed to start the compressor and fan motors. |
| Refrigerant Recharge | $250 - $750 | Needed when the system loses cooling or heating efficiency due to low refrigerant levels. Includes leak detection, repair of minor leaks, and recharging the system to the manufacturer-specified level. |
| Reversing Valve Replacement | $450 - $900 | Required when the unit cannot switch between heating and cooling modes. The reversing valve directs refrigerant flow and is unique to heat pump systems. |
| Compressor Replacement | $1,500 - $3,000 | Major repair needed when the unit fails to heat or cool entirely. The compressor is the heart of the system, circulating refrigerant between the indoor and outdoor coils. |
| Evaporator/Condenser Coil Replacement | $1,200 - $2,800 | Replacement needed when coils develop leaks or corrosion that cannot be economically repaired. Coil damage reduces heat transfer efficiency and can cause refrigerant loss. |
| Control Board Replacement | $500 - $1,200 | Required when the system has electrical failures or erratic behavior. The control board manages all system operations including defrost cycles, fan speeds, and compressor staging. |
| Full System Replacement | $4,500 - $8,000+ | When repairs exceed the value of the unit or multiple major components fail simultaneously. Includes removal of the old system and installation of a new heat pump with updated refrigerant lines and electrical connections. |
Frequently Asked Questions
Yes—heat pumps can make sense in Ann Arbor when properly sized for local winters. The city is in Climate Zone 6, with a design heating temperature of -5°F and cooling temperature of 91°F. Cold-climate models can provide year-round heating and cooling, though performance and backup needs depend on the home and system.
Michigan electricity averages 19.3¢ per kWh, so potential savings depend on your current fuel, rates, equipment efficiency, and insulation. Palmetto offers a $0-upfront Comfort Plan with maintenance and repairs included, or direct purchase with possible state or utility rebates where available. No federal heat pump tax credit applies to systems installed in 2026.
Heat pumps can work efficiently in Ann Arbor, including through much of winter, because they move heat rather than generate it. Cold-climate models continue heating below freezing, though their efficiency declines as outdoor temperatures fall. Ann Arbor is in Climate Zone 6, with a -5°F design heating temperature, so equipment selection and sizing matter.
At Michigan’s current average electricity price of 19.3¢ per kWh, operating cost depends on the heat pump’s seasonal performance, home insulation, and thermostat use. A qualified installer can assess whether backup heat is needed on the coldest days. Palmetto offers a $0-upfront Comfort Plan or direct purchase; rebates may vary.
In Ann Arbor, Palmetto’s Comfort Plan lease may fit homeowners seeking $0 upfront, predictable monthly payments, and a hassle-free experience, with maintenance, repairs, and warranty coverage for the plan’s life. Buying takes a one-time payment and gives you ownership; it may fit if you want control of the equipment and are prepared to manage its upkeep.
Ann Arbor’s Climate Zone 6 design heating temperature is -5°F, so compare cold-weather performance; Michigan electricity averages 19.3¢ per kWh, which affects operating costs. For systems installed in 2026, no federal heat pump tax credit is available, but state or utility rebates may be active. Check eligibility and service terms before choosing.
Heat pump installation costs in Ann Arbor depend on home size, insulation, existing ductwork, and equipment capacity, so a home assessment is needed for an accurate price. Zone 6 winters, with a -5°F design heating temperature, can affect system sizing. Michigan electricity averages 19.3¢ per kWh, which affects operating costs, not installation price.
Palmetto offers a Comfort Plan with $0 upfront cost and predictable monthly payments, including maintenance, repairs, and warranty coverage for the plan’s life. With direct purchase, you pay upfront and own the equipment; state or utility rebates may be available. No federal heat pump tax credit applies to systems installed in 2026.
A heat pump can be financially worthwhile in Ann Arbor, but savings depend on your current heating fuel, energy use, and system design. Michigan’s electricity price is about 19.3¢ per kWh. In Climate Zone 6, where design temperatures reach -5°F for heating and 91°F for cooling, cold-weather performance and backup heat matter.
Compare annual costs with your current system, including maintenance and energy bills. Palmetto’s Comfort Plan has no upfront cost, a predictable monthly payment, and maintenance, repairs, and warranty coverage for the plan’s life. Buying means owning the equipment and may qualify for state or utility rebates where available. No federal heat-pump tax credit applies to 2026 installations.
In Ann Arbor, heat pumps are installed by HVAC professionals who assess the home, size the system, and handle installation. Palmetto offers homeowners two ways to get a heat pump: its Comfort Plan or direct purchase. Ask the provider who will perform the installation and what service and warranty coverage are included.
Ann Arbor is in Climate Zone 6, with a design heating temperature of -5°F and design cooling temperature of 91°F, so a contractor should size equipment for local conditions. The Comfort Plan has $0 upfront cost and includes maintenance and repairs; direct purchase means owning the system and may qualify for active state or utility rebates.
HVAC is the overall system for heating, cooling, and ventilation in a home. A heat pump is one type of HVAC equipment: it moves heat to warm a home in winter and removes heat to cool it in summer. Unlike a furnace paired with an air conditioner, it can provide both functions.
For Ann Arbor, Climate Zone 6 has design temperatures of -5°F for heating and 91°F for cooling, so proper sizing and cold-weather performance matter. Michigan electricity costs 19.3¢ per kWh, and a heat pump’s running costs depend on its efficiency and your home’s energy use. Palmetto offers a Comfort Plan lease or direct purchase.